HUGE Price Reduction!!Great Bay views & unlimited potential with this charming 3 bedroom 3 bath home -Located in Belmont hills. Large kitchen, romantic master suite with views and fireplace Close to schools, parks shopping and more. Come live the dream!B of A Prequalification required with all offers, Free appraisal & credit report if buyer finances with B of A Bank owned and they want it sold!

Thanks to Burbed reader JW for this find!

Here’s what JW originally sent to me:

Is that a chimney or are you glad to see me?

The first picture has an angled shot to emphasize the fact that it has a tall chimney.

Indeed that is a pretty… uh… impressive package of a photo. But let’s dig into the details. In particular, let’s find out more about this “HUGE Price reduction” (why is everything about size in this listing?)

I’m not sure I’d call that HUGE, but for the Real Bay Area, even $1 of reduction is huge. Hey Belmont… take it easy on these cuts. It doesn’t make you look good.

Hi Sonarrat, good luck to you. Not all of SJ is like that. Cambrian is pretty nice, quiet. Rents will be higher though, probably $2k or so for a 3/2, depending on the exact location. Cheaper than the zip that shall not be named.

I’m actually thinking of gated communities with security, like The Woods on the south side. If it could be north of San Jose that would be great, since I’m always running up and down the peninsula and the traffic here blows.

sonarrat- The place probably would have sold for closer to $600k near the peak. Can you imagine someone in the neighborhood paying $600k?

Also note how quick and easy it is to move as a renter. Sure an owner could do the same, but he’d have the carrying costs associated with the empty home. You know, that cost does not matter since it was so cheap to take the $300k hit–we must remember: it’s always cheaper to buy.

They did buy for $575K – after it had been listed at $629K for several months. They thought they were getting a deal. Instead they got a lesson on buying in marginal neighborhoods when the market is hot.

I was just guessing based on all the “useless aggregate data.” I’d suggest my guess was pretty close, given I don’t have any specific details.

This is likely another example where someone had some cash that was earning near zero percent, so they were attracted into the real estate market to earn a much better return–a sure thing. Or, if Other People’s Money was used, then it was a sure way to get rich (maximize ROE based on positive leverage).

As far as that lesson on buying in marginal neighborhoods, remember I’ve suggested buying in the marginal neighborhood and selling in the RBA. Too often we are seeing examples where people bought in the RBA, but sell in a marginal neighborhood. While the game might not be exactly zero sum, who walks away with the cash when you buy in the RBA and sell in a marginal neighborhood?

So many people are math challenged. $575k = $57.5k times 10. So if a person nets, after income taxes, $57.5k, it’d take 10 years of every dollar of net earnings to buy this place (undiscounted). Ok, I didn’t account for all the other expenses in life, so let’s say such person saves $20k a year for 30 years (undiscounted), that is $600k.

And in under five years, the market has cleaned out 15 years of saving $20k per year.

Probably it’s more like $50 in gasoline is always too expensive but $600,000 homes are worth it.

I’ve toured this house in person. The neighborhood is nice and the views are wonderful. The listing doesn’t do the property justice though. There’s a wet bar at the top of the stairs by the entrance with a punching wall to the right (previous owner appears to have been an angry drunk). The atrium off of the kitchen is missing a few panes of glass – for that indoor/outdoor feel that takes advantage of RBA weather. And roughly 1/3rd of the electrical socket plates are missing, so you’ll have an opportunity to put your personal touch on the home as soon as you move in.

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